Retirement
Why it will now cost more to retire
The cost of retiring just increased, with surging fuel costs and the rising price of food and healthcare negatively impacting a retiree’s bottom line.
Why it will now cost more to retire
The cost of retiring just increased, with surging fuel costs and the rising price of food and healthcare negatively impacting a retiree’s bottom line.
According to the latest figures by the Association of Superannuation Funds of Australia (ASFA), the cost of retiring increased in the June quarter following a lift in basic living expenses.
The ASFA Retirement Standard June quarter 2021 figures indicate that couples aged around 65 living a comfortable retirement need to spend $63,352 per year and singles $44,818.
Those figures are up by 0.8 per cent and 0.9 per cent, respectively, in the previous quarter.
However, over a full year, the price of a comfortable retirement for a couple increased by 2.3 per cent, while for a single person it will now cost 2.6 per cent more to retire comfortably.
The increase in the cost of living is led by surging fuel costs, which the ASFA said is 27.3 per cent higher in just a 12-month period, while medical services increased by 6.7 per cent and even the basic costs of fruits and vegetables are hurting retirees’ back pockets.
“Price increases faced by retirees have begun to accelerate following a period when COVID-19 led to suspensions or delays in key costs such as health insurance,” said ASFA CEO Dr Martin Fahy.
After adjusting for one-off changes, and removing irrelevant CPI increases such as childcare, education and international travel, price increases for retirees were considerably higher than the underlying rate of inflation.
As it currently stands, the national inflation rate stands at 1.5 per cent over the year to June.
“Small price rises across the board can add up to have a big impact on the average retiree budget. The cost of retirement is now 2 to 3 per cent more expensive, on average, than a year ago,” Dr Fahy noted.
As such, the ASFA CEO highlighted the importance of saving buffers and why older Australians need to get ahead on their superannuation.
“It’s so important that future retirees are able to build sufficient savings over their working lives to ensure they can face retirement with financial confidence,” he said.
One way to do so is to lift the rate of superannuation, which Dr Fahy is in support of.
“Moving Australia to the 12 per cent superannuation guarantee setting is an excellent step towards achieving this goal,” Dr Fahy concluded.
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